Watson, Inc. applies overhead cost based on direct labor hours. In completing the 200
units in job #120, the company incurred $12,000 in direct materials and 500 direct labor
hours at $18 per hour. The predetermined overhead rate is $6 per direct labor hour.
What is the total cost of the units in job #120?
a. $18,600
b. $21,000
c. $22,200
d. $24,000
Because the assets included in the current ratio have different levels of liquidity that
reflect different degrees of collectability, many companies use which of the following
ratios to measure current liquidity?
a. Current ratio.
b. Working capital.
c. Quick ratio.
d. None of these answer choices are correct.
Which of the following items is not classified as indirect materials for a furniture
manufacturing company?
a. Sanded and finished wood used to make bed frames
b. Decorative brads used on the arms of chairs
c. Glue used to strengthen joints
d. All of these answer choices are classified as indirect materials.
Which of the following is not an example of an internal operating nonfinancial
measure?
a. Labor productivity
b. Product defects
c. Product flexibility
d. Setup efficiency
Which of the following is not relevant to a decision involving the allocation of a single
constrained resource among multiple products?
a. Unit variable cost of each product.
b. Selling price of each product.
c. Fixed manufacturing costs.
d. Number of orders waiting to be filled.
You are provided with the following transactions Martinez and Co., during a recent
year.
Required: Assuming the indirect method is used, complete the table above by first
indicating whether each transaction was a source (S), use (U), or non-cash transaction,
and then which section of the statement of cash flows it would be reported under by
inserting an X under the appropriate column.
Which of the following does not appear in the Other Cash Disbursements section of the
Cash Budget?
a. Dividend payments
b. Income tax payments
c. Depreciation on factory equipment
d. Purchase of new equipment
Why is the direct materials price variance based on the quantity of materials purchased,
but the direct materials quantity variance on the quantity of materials used?
a. Managers need to isolate variances and take corrective action as soon as possible.
b. Production managers are only interested in the quantity purchased.
c. It is a simpler process to calculate the quantity variance on what is purchased.
d. All of these answer choices are correct.
Berry Corporation reported the following cash transactions for last year.
Required:
a. Prepare the investing section of Berry’s statement of cash flows.
b. Prepare the financing section of Berry’s statement of cash flows.
Your friend purchased a non-refundable ticket to a popular Broadway play for Friday
night. Yesterday she was invited to spend Friday on the lake with a group of sorority
sisters. Her only cost will be for personal items such as lunch. The lake is two hours
away from her apartment and the play is another hour in the opposite direction. She
knows that if she goes to the lake, she will not get back in time to attend the play.
Which of the following is not a relevant cost in making her decision on whether to go to
the play or to the lake?
a. The price of the ticket
b. The price of eating out at the lake
c. The price of renting an umbrella at the lake
d. The price of driving to the play
A measure that provides managers with information they need to take timely, corrective
action are referred to as
a. Budget indicators.
b. Variance indicators.
c. Cycle indicators.
d. Leading indicators.
If activity level increases, what happens to the total variable cost?
a.It remains the same.
b.It decreases.
c.It increases.
d.It depends on how much the activity level increases.
Which of the following would be a feasible explanation for an unfavorable direct
materials quantity variance?
a. Purchased more materials than specified because the larger quantity resulted in a
price discount
b. Purchased a higher-quality material than specified in the standard
c. A machine that was out of alignment caused several units of product to be scrapped
d. Only higher-paid experienced factory workers were assigned to the product
Ledbetter, Inc. has the following production and cost data for three of its products,
Basic, Standard and Deluxe:
A total of 8,000 hours is available each period for the production of the three products.
The demand for both products is strong and Ledbetter has orders for 1,200 of Basic,
3,000 of Standard and 800 of Deluxe. Ignoring qualitative issues, how many of each
product should Ledbetter produce?
List the five steps in implementing an activity-based costing system.
What is budgetary slack and why is it an issue in budget preparation?
List three goods or services likely to use a process costing system and three that are
likely to use a job order costing system.
Parker Corporation provided the following financial information:
Required:
Using the direct method, prepare the operating activities section of Parnell’s statement
of cash flows.
Academy Awards makes plaques and trophies. Last year the company’s direct labor
payroll totaled $140,000 for 17,300 direct labor hours. The standard wage rate is $7.75
per direct labor hour.
Required:
Calculate Academy Awards’ direct labor rate variance for the period.
Patterson Company’s has provided the following financial information for last year.
Required:
Using the direct method, prepare the cash flows provided by operating activities section
of the statement of cash flows.
Assume that on January 1, 2012 you purchased ten shares of XYZ Corporate stock for
$22 each. On September 30, 2014, you sell one-half of your stock for $28 each. What is
your return on your investment?
A&W Manufacturing has implemented an activity-based costing system. For
warehousing/packaging, the activity cost totals $140,400. The number of batches
produced is the cost driver for this activity pool. A&W has the following information
relating to its warehousing/packaging department:
Required:
Calculate the activity cost rate per batch for the warehousing/packaging department.